Arizona’s billion-dollar school voucher program under fire

PHOENIX — Wasteful spending. Little oversight. Conflicts of interest.

Those are the explosive findings from a new report issued by Arizona’s Auditor General examining the state’s rapidly expanding Empowerment Scholarship Account program — better known as ESA.

The report paints a troubling picture of a billion-dollar taxpayer-funded initiative plagued by weak controls, questionable spending, and internal management failures.

RELATED: ESA study reveals flawed system: Will AZ lawmakers act?

After months of resistance from the Arizona Department of Education, investigators were finally granted access to examine the ESA program. What they found alarmed a seasoned education expert. 

“Clearly, according to the report, there are no standard procedures that are in place,” said Princeton University Professor Jennifer Jennings, a researcher who specializes in school choice policies and reviewed the ESA report.

Arizona’s ESA program allows parents to use public education dollars for private schooling, homeschooling expenses, educational materials, tutoring, and other approved costs.

The program has grown dramatically in recent years, ballooning into a taxpayer-funded system worth more than $1 billion annually for just more than 100,000 kids.

But according to the Auditor General, oversight has not kept pace with that growth.

“Rickety Excel Sheets”

The report found the Arizona Department of Education lacked basic financial controls and standardized procedures to monitor spending.

Jennings said one detail in particular stood out.

“The fact that tools like kind of a rickety Excel sheets going around the office to keep track of some of this stuff — and sometimes not all the time — I found quite astonishing,” she said.

The findings echoed previous investigations by 12News, which uncovered widespread misuse of ESA funds by tens of thousands of account holders.

According to reporting by 12News Investigates, at least 20% of ESA parents last year improperly spent approximately $10 million in taxpayer funds — including purchases involving luxury items like iPhones, widescreen TVs and Kenmore appliances.

Millions Approved Automatically

One of the most significant revelations involved a backlog of reimbursement requests.

The report states that beginning in December 2024, State Schools Superintendent Tom Horne ordered staff to automatically approve all ESA purchase requests under $2,000.

As a result, 2.3 million transactions totaling $654 million were processed automatically. 

Auditors found that many questionable purchases slipped through the system, including:

– amusement park admissions

– other travel-related expenses

Those expenses are prohibited under ESA rules.

The report also identified improper purchases, including food and drinks, dashboard cameras, and bathroom accessories.

Using a very small audit sample spanning two years, investigators found that 34 percent of ESA transactions contained problems, including:

Despite the findings, Superintendent Tom Horne defended the program and his agency’s handling of ESA oversight.

In a statement responding to the audit, Horne said:

“The Auditor General’s report completely demolishes the myth about misspending in the ESA program. The potential is minuscule. With a budget of a billion dollars, the Auditor General found approximately $86,000 – that is 0.0086 percent – of potential ESA dollars at risk,” Horne said.  “The ESA program is being operated appropriately and has been falsely and unfairly attacked by its critics.”

However, the Auditor General did not measure the misspending as a percentage of total spending.

Instead, the misspending was measured against a total of $251,446 in random purchases from July 2023 to October 2025,

That translates into 34 percent of purchases with what the Auditor General called “issues.”

Conflict-of-Interest Concerns

The report also raised concerns involving ESA Director John Ward.

Auditors found that Ward gave special treatment to two ESA account holders and noted that he personally benefited from the ESA program himself. Public records obtained by 12News Investigates show Ward intervened at the request of Jenny Clark, a major ESA advocate who runs the non-profit Love Your School.

Ward disputed much of the Auditor General’s findings. 

In another troubling finding, an ESA employee approved the purchase of sexually explicit books for an account holder with whom the employee had a personal relationship. The books are written by Ana Huang, who says on her website that her books contain explicit sexual content and profanity and are recommended for adults.

The report further stated that the Department of Education failed to act on fraud-detection assistance offered by ClassWallet, the private company that processes ESA claims.

Jennings compared the lack of oversight to other public assistance programs.

“It’s just very out of sync with the level of scrutiny that we apply, for example, to food stamps, or TANF, which used to be known as welfare or Medicaid,” she said.

The audit lands at a politically sensitive time.

Debates for Arizona State Schools Chief are taking place this week, with Democratic candidates Brett Newby and Terry Leyba Ruiz debating Wednesday and Republican candidates — including Horne and GOP challenger Kimberly Yee — debating Thursday.

Meanwhile, a state lawmaker is calling on the Joint Legislative Audit Committee to hold a special hearing about the Auditor General’s findings.

“This should trigger an immediate investigation into John Ward’s conflict of interest and the superintendent’s inability to cooperate with the Auditor General,” said state Rep. Nancy Gutierrez, D-Tucson. 

RELATED: How much do Arizona Empowerment Scholarship Accounts really cost?

RELATED: This southern Arizona family loves Empowerment Scholarship Accounts — but they are angry about how some are misusing the program

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